Economic feasibility of a sustainable future: Comparative life cycle cost assessment of electric and internal combustion engine vehicles in the Swedish automotive market

The purpose of the study is to examine the economic feasibility of electric vehicles (EV) and internal combustion engine vehicles (ICEV) in Sweden in 2024. We analyze the life cycle cost (LCC) of a battery electric vehicle (BEV), in comparison to a plug-in hybrid vehicle (PHEV), and an ICEV on the Swedish automotive market. The lifetime period is set to 11 years starting from 2024. As a theoretical contribution to LCC analysis, scenario analysis and break-even analysis from finance literature is used to create alternative scenarios for visualizing how changes in parameter estimates could impact the lifetime costing and analyzing what changes would make the vehicles economically indifferent to own. We consider the most popular cars in each category in Sweden in 2023. The results show that the PHEV Volvo XC60 has the highest LCC, calculated at 1,104,065 Swedish Krona (SEK) in the base case scenario. The equivalent cost for the BEV Tesla Model Y is calculated to 877,736 SEK while the ICEV Volkswagen T-Roc has the lowest LCC at 635,222 SEK. The break-even scenarios show that it would take a lot of incentives, both from the government and vehicle producers to reach a more equal lifetime cost between the ICEV and the electric vehicle (EV) alternatives. Swedish government’s decision to remove a major purchase incentive for EVs in 2022, therefore, may result in impeding the green transition goals set by the European Union, which are partly contingent on a rapid expansion of the EV fleet. • Life-cycle cost analysis of the most popular vehicles in Sweden in different powertrains. • Use scenario analysis and break-even analysis to create alternative scenarios. • Plug-in hybrid and battery electric vehicles have significantly higher life-cycle costs under different scenarios: bear, base, best, and blue-sky. • Increased government incentives, such as a green deal scenario with a progressive carbon tax on ICEVs, are essential to make EVs economically attractive.